If your salespeople negotiate prices with individual customers, you use price segmentation. The question is, are you using it well?
Price segmentation means charging different prices to different customers based on their willingness to pay.
If every salesperson were a master at selling value, and a master at negotiation, then it’s likely your price segmentation is fantastic. However, you know this probably isn’t the case. So what can you do?
First, and obviously, provide more training on selling value and negotiations. But even with that, some salespeople learn and use these capabilities better than others.
Another technique that can work well is to provide better pricing guidance. Instead of relying on salespeople to determine how much each customer is willing to pay, you could help them. A salesperson sees only so many deals. You may see the deals of every salesperson. You may be able to determine the characteristics of the customers or situations where they are less price sensitive.
Then, you can provide guidance to your salespeople about each potential deal. Usually, this is through calculating a target price, the price you think they should be able to win at. Then, offer a bigger commission when they sell above that price.
No price segmentation is perfect, but this technique enables you to help your salespeople even more effectively charge the right prices to the right customers.
What other techniques can you use?
Now, go make an impact!
